EVENING. People.

Treasury Plans To Increase Return On U.s. Savings Bonds

April 30, 1997

In response to sagging sales, the government is planning to change the way it calculates interest on U.S. Savings Bonds to provide investors a better return.

The change, to be announced by Treasury Secretary Robert Rubin at a news conference scheduled Wednesday, will affect millions of Americans, many of modest means, who use the bonds to save for their children's education or as holiday and birthday gifts.

For the past two years, the Treasury Department has had a two-tier system. For the first five years after purchase, a holder of a Series EE bond would be paid 85 percent of the average market rate on six-month Treasury bills. After that, the bonds would earn 85 percent of the rate on five-year Treasury notes.

Under the new, simpler system, all bonds issued starting Thursday will earn 90 percent of the five-year note average.